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Why is liquidity important? Greece may be the word but it's been a problem for the...

Why is liquidity important? Greece may be the word but it's been a problem for the EU. When they had debt obligation problems in 2010 there was worry it would spread to other EU countries. How does an integrated financial market allow crisis in one area to spread to another?

You just won the lottery! $1,000,000/yr for 20 years. If the appropriate discount rates is 6%, what's that worth today? What are your plans for the $?

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ANSWER: 1) Liquidity- It is the ability of a financial instrument to convert it into the cash. Liquidity tells how quickly an investment can be converted into cash. Importance of Liquidity Liquidity is important to know the worth of an asset and whether the asset is saleable in the market or not. Liquidity fulfills the need of urgent cash. There are some financial assets that are highly liquid. Greece debt crisis affect the other countries in the Euro zone such as Italy and Portugal. Financial turmoil brought the Euro value down. Euro currency lost its value and got devaluated in terms of other currencies. Greece became the first developed country to default on International monetary that they wont be able to recover because of liquidity crunch Value of foreign investment in Greece came down. Greece crisis will hit the growth of the countries in Euro zone as well as the world economy fund debt. Countries in Eurozone gave loan to Greece 2) Present value of annuity-Annuity [-(1tinterest rate)-time periodlrate -S1,000,000[1-(1.06) -201 0.06 -$1,000,000x11.46992122 Which is equal to -$11,469,92122(Approx).

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